Why Some Merchants Are Considered to be High Risk

Why Some Merchants Are Considered to be High Risk

Dealing with merchant accounts can be a bit difficult for some business owners. Fortunately, the Internet makes finding information far easier than ever before, and online options can make the application process simple. However, one factor some fail to consider is whether or not their business is considered high risk. Here are some of the ways that a business can be found to be risky.

Products of Questionable Legality

Payment processing companies are often reluctant to provide services to those who sell products of questionable legality. Electronic cigarettes, for example, are considered legal but have been subject to court cases in the past. Because of this, many companies do not want to risk dealing with potential legal issues. In addition, adult content often falls under this category as well despite its widely accepted status as legal. Those who sell these products may have to find merchant accounts companies that deal with them specifically.

Off-Shore Businesses

The last recourse for payment processing companies is the court systems. Although it is rare that courts are necessary, dealing with off-shore businesses may be impossible. In addition, many who run high-risk businesses base their operations in foreign countries as a means of dodging domestic rules and regulations. Those who provide merchant accounts and payment processing services are far more likely to accept companies based in the United States.

Questionable Advertising

One red flag many companies look for is content that appears to be spammy or otherwise questionable. While advertising techniques do not necessarily mean that a company will be difficult to deal with, most ethical companies choose to keep their advertising well within the range of ethical practices. It is common for those who rely on dubious advertising techniques to be labeled as high risk.

Accepting credit and debit cards is essential for running businesses, and those who run online businesses must accept these payment methods to succeed. However, those who provide these services take certain risks, and some merchants are riskier than others. For some online service providers, high-risk merchants are simply too expensive, and accepting them would require demanding higher rates from other customers. While most businesses are viewed as low risk, there are number of reasons why a particular company might raise a red flag.